Apple: My Play This Week

by JDH on November 11, 2017

I’ll get back to talking about gold next week (and I’m guessing you want to be short, not long at the moment, but only temporarily). Today, let’s talk Apple (the stock, not the red thing that grows on trees).

I am of the view that as long as the government keeps printing money, and that money gets parked in the stock market, it is likely that the big stocks, like Apple, will continue to rise.

But I could be wrong, so I decided to play it the easy way.

On November 6 I bought Apple at $172.40. I then did a covered write, selling the Apple $175 calls for 84 cents, expiring after the close on November 10. I assumed one of two events would occur:

Apple would close November 10 above $175, at which point my shares would be called, and I would be forced to sell my shares for $175. That would be fine, since I only paid $172.40 for them, so with my 84 cent option premium that would be a profit of $3.44, which on an investment of $172.40 (actually less with the option premium, but let’s keep it simple) is 2 percent in four days. Not bad.

Apple would close below $175, and I would keep my shares, and the options would expire worthless, and I would keep my 84 cents.

As it turned out, Apple closed at $174.67, so the options expired worthless. All good.

Except, for reasons I can’t fathom, on November 10, when Apple was trading (briefly, intra-day) above $175, some of my shares were called, and I was forced to sell them at $175 (see option 1 above). I guess someone wanted those shares, or had a position they needed to close out. Fine. I got $175 for shares that closed the week at $174.67, so I’m up, so I’m happy.

What’s next?

I will likely wait for a down day in Apple, hopefully a Tuesday or a Wednesday, and I’ll buy the shares again, and do a covered write again, and see what happens.

If you could make 2% a week, that’s 100% per year, which would be awesome. Of course you can’t, but a few points here and there is fine with me.

I know have lots of cash in my account, so I’ll decide next week how to proceed.